RusHydro Group aims to reduce its operating expenses by almost RUB 9 bn in 2016 as part of cost optimization program
PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) steps up its efforts aimed at operational efficiency improvement as well as reduction of general and administrative expenses of the Company, its branches and PJSC RAO ES of the East holding. Implementation of measures aimed at optimization of costs will result in decrease in total amount of expenses of RusHydro Group by RUB 8.96 bn or 9.2% adjusted for inflation expectations as compared to 2015.
These measures target reduction of operational costs in the parent company – PJSC RusHydro – by RUB 3.73 bn (-14%) in 2016, as compared to 2015 (adjusted for inflation). In 2016, operational costs of RAO ES of the East holding will be reduced by RUB 5.23 bn (-7%) as compared to 2015 (adjusted for inflation). Optimization of costs will be a result of reduction of administrative expenses in the holding’s parent company and its key subsidiaries.
RusHydro Group has also amended its investment program for 2016 in order to reduce capital expenses. The Company plans to smooth the funding schedule of works, extend the implementation schedule of certain works within comprehensive rehabilitation and modernization program and reduce capital allocations, including through efficiency improvement of procurement procedures. However, the optimization of the rehabilitation and modernization plan will not affect the quality of implementation, as well as reliability and safety of hydropower plants.
Additionally, RusHydro management and the Russian government have reached an agreement to carry out a comprehensive audit of the financial and business activities of the Group by an independent auditor. The audit will result in identification of the scope and scale of additional costs reduction and optimization of the investment program in medium term. This will form the basis for development and implementation of a plan aimed at higher financial stability of RusHydro, improved operational and investment efficiency, increase investment appeal as well as introduction of more stringent KPIs for the management.
The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially from these statements. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.
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